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If they do not particpate in the MTC amnesty program, FBA sellers are subject to back   tax.

Sales Tax Amnesty Program to Help Amazon Vendors with Nexus Compliance

The Multi-State Tax Commission (“MTC”) announced an amnesty program for vendors that sell through Amazon that may have had nexus within a state due to the Fulfillment by Amazon (“FBA”) program. Under the FBA program, sellers store inventory at various Amazon warehouses, often at Amazon’s direction. As a result, inventory may be present in warehouses in several states, triggering sales tax, corporate tax and personal income tax nexus. This would be regardless of whether the seller has any other presence within the state where its inventory is stored.

The MTC program is offering retailers in participating states who sell via Amazon the chance to register for a sales tax amnesty program. The program – available from August 17 to October 17, 2017 – would require FBA sellers to begin collecting sales tax by December 1, 2017. The program also features a no-lookback period (lookback periods otherwise vary by state, and are generally three to four years) for unpaid taxes, fines or penalties.

Currently, the following states are participating in the program: Alabama, Arkansas, Colorado, Connecticut, Idaho, Iowa, Kansas, Kentucky, Louisiana, Nebraska, New Jersey, Oklahoma, Texas, Utah and Vermont. Several other states are considering participation.

Non-participating FBA sellers are subject to discovery and, if caught, are subject for back taxes, associated penalties and interest. 

The MTC is an intergovernmental state tax agency working on behalf of states and taxpayers to facilitate the equitable and efficient administration of state tax laws. The MTC is charged with facilitating compliance in the filing of tax returns and other tax administration. Learn more at here.

With 20 years of experience, Gary Bingel's expertise focuses on state and local income taxation, and also includes sales and use tax consulting. Gary is Partner-in-Charge of EisnerAmper's State & Local Tax Group.

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